Guide to bond ratings
To show the relative standing of a bond within each category, Moody’s assigns a number of 1 through 3, with 1 being the highest and 3 being the lowest. S&P uses + and – signs.
Moody's
Aaa – Highest quality, lowest credit risk
Aa – High quality, very low credit risk
A – Upper medium grade, low credit risk
Baa – Medium grade, moderate credit risk
Ba – Speculative, substantial credit risk
B – Speculative, high credit risk
Caa – Poor standing, very high credit risk
Ca – Highly speculative, nearing or already in default, some prospect of recovering interest and principal
C – Lowest rating, in default, little chance of recovering principal or interest
Standard and Poor’s
AAA – Highest rating, strong capacity to meet financial commitments
AA – Very strong capacity to meet financial commitments. Susceptible to adverse economic conditions and changes in circumstances.
BBB – Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
BBB- – Considered lowest investment grade by market participants.
BB+ – Considered highest speculative grade by marketparticipants.
BB – Less vulnerable in the near-term but could face adverse business, financial and economic conditions.
B – More vulnerable to adverse business, financial and economic conditions but has the capacity to meet financial commitments.
CCC – Vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
CC – Highly vulnerable.
C – Highly vulnerable obligations and other defined circumstances.
D – Payment default on financial commitments.
* In 2010, Moody's and Fitch "recalibrated" their ratings for most state issuers in an attempt to standardize ratings across all types of issuers. See August 2010 Fiscal Focus.
Illinois Issues, November 2012
